To budget or not to budget

A budget can be a useful tool because it can help you clarify priorities and take the steps you need to achieve your goals. Sometimes it helps simply to see the numbers written down on paper.

Suppose, for example, you figure out that you need to put about $3,000 a year into short- and long-term savings.

• With a budget: You notice you’ve only allocated $100 a month to savings. You look for ways to reduce spending in other areas, and are able to make up the difference and achieve your goal, accumulating $15,000 over the next five years.
• Without a budget: You sock away whatever’s left over, which usually averages out at around $100 a month. Five years pass, and you realize that while you have put $6,000 away, you’re $9,000 short of your goal.

The important thing is to monitor your spending and be aware of what you do with your money. Whatever system helps you do this is just fine, because it puts you back in control.

See how making a budget can help you meet your savings goals.